II. Bring About an All-Round Upsurge of the Socialist Economy

OF the various tasks for bringing about an all-round new situation, the most important one is to push forward the socialist modernization of China's economy. For this purpose, the Party has formulated the strategic objective, priorities and steps of our economic construction as well as a series of correct principles in a spirit of realism.

The general objective of China's economic construction for the two decades between 1981 and the end of this century is, while steadily working for more and better economic results, to quadruple the gross annual value of industrial and agricultural production - from 710 billion yuan in 1980 to 2,800 billion yuan or so in 2000. This will place China in the.front ranks of the countries of the world in terms of gross national income and the output of major industrial and agricultural products; it will represent an important advance in the modernization of her entire national economy; it will increase the income of her urban and rural population several times over; and the Chinese people will be comparatively well-off both materially and culturally. Although China's national income per capita will even then be relatively low, her economic strength and national defence capabilities will have grown considerably, compared with what they are today. Provided that we work hard and in a down-to-earth manner and bring the superiority of the socialist system into fuller play, we can definitely attain our grand strategic objective.

From an overall point of view, what is most important in our effort to realize this objective in economic growth is to properly solve the problems of agriculture, energy and transport and of education and science.

Agriculture is the foundation of the national economy, and provided it grows, we can handle the other problems more easily. At present, both labour productivity and the percentage of marketable products are rather low in our agriculture; our capacity for resisting natural calamities is still quite limited; and, in particular, the contradiction between the huge population and the insufficiency of arable land is becoming ever more acute. From now on, while firmly controlling the population growth, protecting all agricultural resources and maintaining the ecological balance, we must do better in agricultural capital construction, improve the conditions for agricultural production, practise scientific farming, wrest greater yields of grain and cash crops from limited acreage, and secure the all-round development of forestry, animal husbandry, sideline occupations and fishery in order to meet the needs of industrial expansion and of higher living standards for the people.

Energy shortage and the strain on transport are major checks on China's economic development at present. Growth in energy production has slowed down somewhat in the last few years, while waste remains extremely serious. Transport capacity lags far behind the increasing volume of freight, and postal and telecommunications facilities are outmoded. To ensure a fair rate of growth in the national economy, it is imperative to step up the exploitation of energy resources, economize drastically on energy consumption and at the same time strive hard to expand the transport and postal and telecommunications services.

The modernization of science and technology is a key link in our four modernizations. Today, many of our enterprises are backward in production techniques, operation and management; large numbers of workers and staff members lack the necessary scientific knowledge, general education and work skills; and there is an acute shortage of skilled workers, scientists and technicians. In the years to come, we must promote large-scale technical transformation in a planned way, popularize technical measures that have yielded good economic results, and actively introduce new techniques, equipment, technologies and materials. We must step up research in the applied sciences, lay more stress on research in the basic sciences and organize people from all relevant fields to tackle key problems in scientific research. We must improve our study and application of economics and scientific business management and continuously raise the level of economic planning and administration and of the operation and management of enterprises and institutions. And we must work vigorously to universalize primary education, strengthen secondary vocational education and higher education and develop educational undertakings of all types and at all levels in both urban and rural areas, including training classes for cadres, workers, staff members and peasants and literacy classes in order to train all kinds of specialists and raise the scientific and educational level of the whole nation.

In short, in the next 20 years we must keep a firm hold on agriculture, energy, transport, education and science as the basic links, the strategic priorities in China's economic growth. Effective solution of these problems on the basis of an overall balance in the national economy will lead to a fairly swift rise in the production of consumer goods, stimulate the development of industry as a whole and of production and construction in other fields and ensure a betterment of living standards.

Population has always been an extremely important issue in China's economic and social development. Family planning is a basic policy of our state. We must do our utmost to keep our population within 1.2 billion by the end of this century. The total number of births is now at its peak. Excessive population growth will not only adversely affect the increase of percapita income but also cause serious difficulties in food supply, housing, education and employment, and it may even disrupt social stability. Consequently, we must never slacken our effort in family planning, especially in the rural areas. We must conduct intensive and meticulous ideological education among the peasants. Provided that we do our work well, we can succeed in bringing our population under control.

In order to realize our objective for the next two decades, we must take the following two steps in our strategic planning: in the first decade, aim mainly at laying a solid foundation, accumulating strength and creating the necessary conditions; and in the second, usher in a new period of vigorous economic development. This is a major policy decision taken by the Central Committee after a comprehensive analysis of the present conditions of China's economy and the trend of its growth.

Our national economy has grown steadily even in the past few years of readjustment, and the achievement is quite impressive. In many fields, however, the economic results have been far from satisfactory, and there has been appalling waste in production, construction and circulation. We have yet to equal our best past records in the materials expended in per unit products, in the profit rate of industrial enterprises, in the construction time for large and medium-sized projects and in the turnover rate of circulating funds in industrial and commercial enterprises. Apart from some objective factors not subject to comparison, the main causes for this are the "Left" mistakes of the past, which resulted in blind proliferation of enterprises, an irrational economic structure, defective systems of economic administration and distribution, chaotic operation and management and backward production techniques. Things started to pick up a little in 1982, with the stress laid on better economic results. Nevertheless, it is impossible in a brief space to solve all such problems which have piled up over a long period. We have to bear this basic fact in mind when drawing up the strategic plan for China's economic development.

In the period of the Sixth Five-Year Plan (1981-85), we must continue unswervingly to carry out the principles of readjustment, restructuring, consolidation and improvement, practise strict economy, combat waste and focus all economic work on the attainment of better economic results. We must devote our main efforts to readjusting the economic structure in various fields, streamlining, reorganizing and merging the existing enterprises and carrying out technical transformation in selected enterprises. At the same time, we must consolidate and perfect the initial reform in the system of economic administration and work out at an early date the overall plan for reform and the measures for its implementation. During the Seventh Five-Year Plan (1986-90), we shall carry out the technical transformation of enterprises on an extensive scale and gradually reform the system of economic administration, in addition to completing the rationalization of the organizational structure of enterprises and the economic structure in various fields. We must also undertake a series of necessary capital construction projects in the energy, transport and some other fields, and the concentrated solution of a number of major scientific and technological problems in the 1980s. Therefore, it will not be possible for the national economy to develop very fast in this decade. But if we complete the above tasks, we can solve the problems left over from the past and build a relatively solid basis for economic growth in the decade to follow. The 1990s will witness an all-round upsurge in China's economy which will definitely grow at a much faster rate than in the 1980s. If we publicize and explain this strategic plan adequately to the people, they will see the bright future more clearly and be inspired to work with greater drive to usher in the new period of vigorous economic growth.

In the five years between this Party congress and the next, we shall complete the Sixth Five-Year Plan and start on the Seventh. To strive for a fundamental turn for the better in China's financial and economic situation in this period means that we must, under the strategic plan outlined above, achieve significantly better economic results, a steady basic balance in finance and credit and basic stability in commodity prices. Clearly, it is of paramount importance to China's long-term economic development that we do our economic work well in these five years.

To bring about an all-round upsurge of China's socialist economy, we must continue to carry out in all our economic work the ten principles for economic construction approved by the Fifth National People's Congress at its Fourth Session, paying special attention to solving the following major questions of principle.

First, concentrating funds on key development projects and continuing to improve the people's living standards.

To attain our strategic objective for the coming 20 years, the state must concentrate needed funds on key development projects in their order of importance and urgency. For this purpose, while endeavouring to overcome undue decentralization in the use of funds, we must bring into play the initiative of all concerned to expand production and achieve better economic results, so that the national income may rise more rapidly. In recent years, state revenues have somewhat decreased and there has been a shortage of funds for urgently needed key projects. On the other hand, funds at the disposal of local authorities and enterprises have grown greatly and have been used for many projects which may seem badly needed from a local point of view; but this inevitably makes it difficult to adequately meet the national needs and to prevent and overcome the tendency towards blindness in construction. We must realize that if key national projects are not guaranteed and if such parts of the infrastructure as energy and transport are not developed, the national economy as a whole will not prosper and the individual sectors are bound to be greatly restricted in their development. Even if there should be some growth in a given locality at a given time, it would not last because of difficulties in striking a balance between supply, production and marketing. We must firmly implant the idea of co-ordinating all the activities of the nation like moves on a chessboard. While continuing to enforce the present financial system and ensure the decision-making power of enterprises, we must appropriately readjust, in the light of the actual conditions of the different localities and trades, the distribution of national and local revenues and the proportion of profits retained by enterprises, and we must encourage local authorities, departments and enterprises to make their funds available for the key projects most urgently needed by the state. While thus pooling funds, we must of course continue to take into consideration the needs of the localities and enterprises. If appropriate financial reserves are left at the disposal of local authorities and enterprises, it will help give scope to their initiative and enable them to embark on those projects which they are best fitted to undertake, especially as regards the technical transformation of existing enterprises. Our country has abundant resources of labour power, so we must pay close attention to increasing the investment of labour. In the rural areas we must put their rich manpower to good use in agricultural capital construction according to their local conditions. In mining, transport and other fields, we must also stress the role of the investment of labour.

The fundamental aim of socialist production and construction is to meet continuously the growing material and cultural needs of the people. A basic principle guiding our economic work is "first, feed the people and second, build the country." The Party and government have done a great deal to bring about a marked improvement in the people's livelihood in recent years. Yet on the whole the living standards remain fairly low. In some low-yield rural areas, or those hit by natural disasters, the peasants are still impoverished, and we must actively help them increase production and income. Urban people, too, still have many problems which call for solution - such as pay, employment, housing and public utilities. The state has decided to take effective measures to improve, steadily and group by group, the living and working conditions of middle-aged intellectuals, who play a backbone role in production, construction and all the other fields. Whether in town or country, living standards can rise only by increasing production, and not by cutting into funds indispensable to national construction, a course that would impair the fundamental and long-term interests of the people. Specifically, we can no longer increase peasant incomes mainly through raising the prices of farm produce or through lowering the fixed quotas of state purchases and enlarging the scope of negotiated prices. The increase of the average incomes of the workers and staff must necessarily be less than that of labour productivity. We must put a stop to the indiscriminate handing out of bonuses and subsidies without regard to the actual state of production and profit. As a matter of fact, a constant improvement in the living standards of the people is possible provided the workers and peasants enhance their understanding and make sustained efforts to raise labour productivity, lower consumption and eliminate waste. As for those problems concerning the people's daily life which can be solved by spending very little or even no money, leaders at all levels must take even more energetic measures to solve them. Concern for the well-being of the people is a fine tradition of our Party, which we should never neglect.

Second, upholding the leading position of the state economy and developing diverse economic forms.

The socialist state sector occupies the leading position in the entire national economy. The consolidation and growth of the state sector are the decisive factors in ensuring that the collective economy of the working people will advance along the socialist road and that the individual economy will serve socialism. As the level of development of the productive forces in our country is on the whole still fairly low and uneven, it is necessary to maintain different economic forms for a long time to come. In rural areas, the principal economic form is the co-operative economy collectively owned by the working people. At present, the state sector alone cannot and should not run all handicrafts, industries, building industry, transport, commerce and the service trades in the cities and towns; a considerable part should be run by the collective. Co-operatives financed and run by young people and other residents have spread to many urban areas in the past few years and played a useful role. The Party and government should support and guide them and forbid discrimination or attacks against them from any quarter. We must also encourage the appropriate development of the individual economy of urban and rural working people as a necessary and useful complement to the public economy, within limits prescribed by the state and under supervision by industrial and commercial administrations. Only through the rational distribution and development of diverse economic forms is it possible to invigorate the urban and rural economy and make life more convenient for the people.

To bring the initiative of enterprises and of the working people into play, we must earnestly implement a responsibility system in the operation and management of both state and collective enterprises. The responsibility system for production set up in various forms in the countryside in recent years has further emancipated the productive forces and it must be adhered to for a long time to come. The thing for us to do is to gradually perfect it on the basis of summing up the practical experience of the masses. In no case must we make rash changes against the will of the masses, still less must we backtrack. With the growth of agricultural production and the rising management ability of the peasants, demands for new types of combined management are bound to arise. We should promote various forms of inter-unit economic combination strictly in accordance with the principle of stimulating production and of voluntary participation and mutual benefit. It can be predicted that in the not too distant future, there will emerge in our rural areas an improved cooperative economy, with a diversity of forms, which will be able to make full use of the advantages in the light of local conditions and facilitate the large-scale adoption of advanced production measures. Recently, the economic responsibility system has also been initiated in industrial and commercial enterprises with some good results. Although industry and commerce are vastly different from agriculture, the application of the economic responsibility system (including the system of responsibility for profit or loss in some of the state enterprises) similarly helps to implement the Marxist principle of material benefit, to heighten the workers' sense of responsibility as masters of the country and to promote production. We should adopt a positive attitude to this system, earnestly sum up experience and discover and devise a set of specific rules and methods which are suited to the characteristics of industrial and commercial enterprises and which can both ensure unified leadership by the state and bring into full play the initiative of enterprises and their workers and staff members.

It is impermissible to undermine the public ownership of the means of production, which is our basic economic system. Of late, there have been cases in certain rural areas of damage to farm irrigation works, destructive lumbering and doing away with the accumulation and retention of common funds by the collective, while in some state-owned industrial and commercial, enterprises, there have been such acts as violation of unified state plans, arbitrary holding back of materials earmarked for unified distribution, withholding of profits that should be turned over to the state, evasion of taxes, wilful inflation of prices and blocking the flow of commodities. All such things, though done by only a small number of people, seriously impair the public economy and the interests of the state and the people, and they must be resolutely corrected.

Third, correctly implementing the principle of the leading role of the planned economy and the supplementary role of market regulation.

China has a planned economy based on public ownership. Planned production and circulation cover the main body of our national economy. At the same time, the production and circulation of some products are allowed to be regulated through the market without being planned, that is, by letting the law of value spontaneously play a regulatory role, within the limits circumscribed by the state's unified plan and in the light of the specific conditions at different periods. This serves as a supplement to planned production and circulation, subordinate and secondary to it but essential and useful nonetheless. The state ensures proportionate and co-ordinated growth of the national economy through overall balancing by economic planning and the supplementary role of market regulation. In the past few years, we have initiated a number of reforms in the economic system by extending the powers of enterprises in planning and by giving scope to the role of market regulation. This orientation is correct and its gains are apparent. However, as some reform measures have not been well coordinated with each other and the corresponding forms of administrative work have lagged behind, cases of weakening and hampering the state's unified planning have been on the increase. This is not good for the normal growth of the national economy. Hereafter, while continuing to give play to the role of market regulation, we must on no account neglect or relax unified leadership through state planning.

In order to make the development of the economy centralized and unified as well as flexible and diversified, planning should take different forms in different circumstances. Plans of a mandatory nature must be enforced in regard to the production and distribution of capital goods and consumer goods in the state sector which are vital to the national economy and the people's livelihood, and especially in key enterprises vital to the whole economy. This is a major manifestation of China's socialist ownership by the whole people in the organization and management of production. For the sector of the economy which is owned by collectives, mandatory targets should also be assigned where necessary, as in the purchase of grain and other important agricultural and sideline products by the state on fixed quota. In addition to plans of a mandatory nature, guidance plans, whose implementation is mainly ensured by means of economic levers, should be used in regard to many products and enterprises. This is because diverse economic forms still exist in China and it is difficult to make precise estimates of the multifold and complex demands of society and of the productive capacity of a vast number of enterprises. But whether in mandatory planning or in guidance planning, we must strive to make it conform to the objective reality, constantly study changes in market supply and demand, consciously make use of the law of value and such economic levers as pricing, taxation and credits to guide the enterprises in fulfilling state plans, and give them varying degrees of powers to make decisions as they see fit. Only in this way can state plans be supplemented and improved as required and in good time in the course of their implementation. As for a number of small commodities which are low in output value, great in variety and produced and supplied only seasonally and locally, it is neither necessary nor possible for the state to control them all by planning. Enterprises may be allowed to arrange their production flexibly in accordance with the changes in market supply and demand. The state, on its part, should exercise control through policies, decrees and administration by industrial and commercial offices and should help those enterprises with the supply of certain important raw and semi-finished materials.

Correct application of the principle of ensuring the leading role of planned economy supplemented by market regulation is of fundamental importance to the reform of China's economic systems. We must correctly define the respective scope and limits of mandatory plans, guidance plans and market regulation and, on the premise that basic stability of commodity prices is maintained, gradually reform the pricing system, price control measures and the labour and wage systems, and establish an economic administrative system suited to China's conditions so as to ensure the healthy growth of the national economy.

Whether commercial work is done well or badly has a direct bearing on industrial and agricultural production and the people's standard of living, and the importance of this truth has become increasingly manifest in China's economic growth. At present, our commercial networks, establishments and facilities are far from adequate, there are too many intermediate links, market forecasting is weak, and many problems related to ideas about business operation and to management remain to be solved.

After acquiring all relevant information and earnestly summing up experience, we must effectively improve our commercial work and unclog, broaden and multiply the channels of circulation so that commodities can flow freely, materials are put to good use and commerce can play its full role in stimulating and guiding production and in ensuring supply and invigorating the economy.

Fourth, persevering in self-reliance while expanding economic and technological exchanges with foreign countries.

It is our firm strategic principle to carry out the policy of opening to the outside world and expand economic and technological exchanges with foreign countries in accordance with the principles of equality and mutual benefit. We must speed the entry of Chinese products into the world market and vigorously expand foreign trade. We must as far as possible make more use of foreign funds available for our national construction. To this end, it is necessary to do all the required preparatory work well and make proper arrangements with regard to the necessary domestic funds and supporting measures. We must actively import advanced technologies suited to our national conditions, particularly those helpful to the technical transformation of our own enterprises, and strive to absorb and develop them in order to promote our production and construction.

In our efforts for socialist modernization, we must take a self-reliant stand, relying mainly on our own hard work. There must be no wavering whatsoever in this respect. Our aim in expanding economic and technological exchanges with foreign countries is to enhance our ability to be self-reliant and to promote, and certainly not to impair, the development of our national economy. We must refrain from indiscriminate import of equipment, and particularly of consumer goods that can be manufactured and supplied at home. In our economic relations with foreign countries, on the premise of unified planning and policy and co-ordinated action, we must stimulate the initiative of various localities, departments and enterprises in their foreign business dealings while at the same time opposing all acts detrimental to the interests of our country and people. In no circumstances must we forget that capitalist countries and enterprises will never change their capitalist nature simply because they have economic and technological exchanges with us. While pursuing the policy of opening to the outside, we must guard against, and firmly resist, the corrosion of capitalist ideas and we must combat any worship of things foreign or fawning on foreigners.

Comrades! Lenin said that living creative socialism is the product of the masses themselves[注释2]Beyond all doubt, it would be impossible for the cause of socialist construction to forge ahead without the soaring labour enthusiasm of the masses in their hundreds of millions, without the initiative of thousands of production units and without the hard work of various localities and departments. To yield the best results, all our economic work, principles, policies, plans and measures must be based on overall arrangement, on taking into consideration the interests of the state, the collective and the individual and on fully arousing and scientifically organizing the initiative of the central authorities, the localities, departments, enterprises and the working people. This is the most important way to bring about an all-round upsurge in the socialist economy. We are confident that the people of all our nationalities will surely exert themselves with one heart and one mind for the realization of the great goal of our country's economic development.